on portfolios, market colour, news,
information on trading axes, flows
and blocks—in effect look after the
client portfolio from a top-down
perspective.

“The buy-side needs help tomonitor what is happening in themarket,” says Matthieu Chardot,head of business development andclient relations at BNP ParibasDealing Services. “Sales traderswill see the flow from hundreds ofclients potentially and can be aninvaluable source of information tohelp buy-siders to monitor what isChardot says that sales traderscan see toxicity or if HFT firms arefront running flows in dark poolsthus combining their traditionalskills with those of a quant.

MiFID II – blessing or a curse?

Understanding each individual
client in detail—the contents of
their portfolios and how they like
to interact with the market—is an
invaluable asset to have. In some
cases the sales trader’s work might
actually involve monitoring the
individual portfolio itself.

“We are small but we get a decentservice from brokers on a dailybasis,” says Paul Mumford, fundmanager at Cavendish Asset Man-agement, a specialist in smallerstocks. “We look at smaller compa-nies so we’re important to smallerboutique brokers. At the same timethey will watch the stocks for me—if I’m on holiday on the beach andsomething happens they will ringme so we get a pretty good serviceactually.”Undoubtedly the increasedcomplications in the market from

“If I’m on holiday on the beach and something happens they will ring me so we get a pretty good service actually.”

PAUL MUMFORD, FUND MANAGER, CAVENDISH ASSET MANAGEMENT

a regulatory standpoint have also
boosted the importance of the sales
trader role. Steering buy-siders
through new edicts is a task sales
traders are increasingly sought for.

“The key problem with tradingis that there is too much informa-tion,” says Christian Voigt, seniorregulatory advisor at Fidessa.“Compliance is becoming morecomplex with more rules and soon. You need a smart way to filterit out and find the relevant stuff.That’s where the sales tradercomes in. They can be your guideOne of the key developmentslikely to impact the sales tradingbusiness over the next few years isthe Markets in Financial Instru-ments Directive (MiFID II). Byleading to a decline in free researchoffered to buy-siders, MiFID IImay well see less investor involve-ment with unfamiliar assets whichin turn could impact sales traderswho have built a role in helpinginvestors tap these assets.

“Under MiFID II banks will cutresearch – less research on illiquidnames means fewer will want tobuy this,” says Horan. “As the mar-ket becomes more focused on pas-sive investments—which is likely tohappen under MiFID II—the salestrader will continue to evolve.”Others believe—conversely—thatMiFID II might actually boost salestrader work at houses with special-isations in particular assets. SG’sSherman says that MiFID II willencourage more investors to usespecialist brokers as the generalscope of their research dwindles.

“Come 2018 all the shackles areoff,” he says. “For SG it’s an oppor-tunity. The cross asset executionexpertise we have and the abilityto source equity blocks put us at anadvantage. We have been position-ing for this for 12 to 18 months.”It could work both ways. In anyrespect it seems that it is too earlyto write off the sales trader. Ma-chines, good as they are, have notreplaced the human touch.